The Greek economy continued moving in a positive direction in the third quarter of 2019, with growth rates maintained, unemployment falling and wages rising. In addition, the trade balance remained relatively balanced despite faster growth rates in the country in comparison with the growth rates of its trade partners, while a less encouraging development was the inflation trend which remained around zero levels, the Parliament’s State Budget Office said in a report.
The report, presented by Frangiskos Koutentakis, concluded that risks have fallen on the fiscal front and that the government will be able to achieve a primary surplus goal of 3.5 pct of GDP. However, some uncertainties remained over budget provision on revenue and spending cuts, with the Office urging the government to remain alert for the need of any possible corrections.
The report said that the number of taxpayers with arrears to the state rose by 38,920 in the third quarter of the year, of which 32,455 owed less than 500 euros each and 12,581 were debts of less than one euro. Total taxpayers' arrears were 104.915 billion euros in the third quarter of 2019.
The report noted that the international environment presented a high level of uncertainty because of trade tensions and a resulting slowdown in economic activity and a downgrade of growth forecasts. On the fiscal front, the Budget Office underlined a stabilization of a lesser budget result compared with the previous year, evidence that the risk of not achieving a fiscal goal has been reduced. On the other hand, state arrears to the private sector grew throughout the year, while taxpayers' arrears to the state rose in the third quarter halting a slightly declining trend which prevailed in the previous two quarters. The report noted, however, that this phenomenon was partly seasonal.
The report said that a European Commission's approval to the "Hercules" plan for the management of Greek banks' non-performing loans was a very significant development as it will allow the securitization of NPLs, lifting a burden from banks' balance sheets and facilitating a more favourable supervisory assessment. The report also noted that a new tax bill, currently in consultation, included significant expansionary interventions, such as lower taxes on corporate and individuals which are expected to positively affect domestic demand, along with measures to promote tax culture, such as electronic transactions.